Protests wipe billions off shares

WATCHING BRIEF:While the occupation of the legislature has wiped NT$533.7 billion off share prices, the government said it does not plan to use the National Stabilization Fund

By Crystal Hsu / Staff reporter

The local bourse has shed NT$533.7 billion (US$17.43 billion) in value since Tuesday last week as students continue to occupy the legislature in Taipei to protest the cross-strait service trade agreement with China, the Financial Supervisory Commission said yesterday.

The TAIEX is likely to weaken next quarter as technology firms adjust their inventories to pave the way for new-generation devices in the second half, ING Securities Investment & Trust Co (安泰投信) said.

“The occupation of the legislature and the Executive Yuan has affected market stability,” with the main trading index losing 1.7 percent, or 154 points, between Tuesday and Friday last week, the commission said in a statement.

The retreat translated into losses of NT$533.7 billion, exacting a serious blow to investors, the commission said, calling on the students to return to school so the lawmaking body could resume normal operations.

However, the TAIEX managed a 0.33 percent gain yesterday after hovering at similar levels for the past week and this year, Taiwan Stock Exchange data showed.

Seeking to defend the trade pact, the commission said domestic banks and securities firms would benefit from a cross-strait exchange in services, as they could expand lending operations, as well as setting up brokerage operations and fund managers in China with Chinese partners.

Local banks, securities firms and fund managers have pushed hard for the pact as they expect it to boost earnings and ease the burden of excessive competition in Taiwan.

The commission shrugged off concerns that Chinese banks would take control of Taiwanese lenders due to the easier access to the local market, saying they would only be able to own up to a 20 percent stake in local lenders under the pact.

The commission said exposure to China amounts to 62 percent of the banking sector’s net worth, lower than the 100 percent cap.

Individual banks must keep their investments and outstanding loans in China below 15 percent of their net worth, or 10 percent of the net worth of financial holding companies, the commission said.

The TAIEX is expected trade between a range of 8,100 and 8,800 in the first half, then climb to 8,800 to 9,000 in the second half as technology firms enter their high sales season, ING fund manager Jason Lin (林界政) said.

Most technology companies shares are likely to have a tepid showing in the next three months due to the slow season, Lin said.

Meanwhile, Vice Minister of Finance Wu Tang-chieh (吳當傑) said yesterday that the government has no plan to use the state-run National Stabilization Fund (國家金融安定基金) to support the stock market because it has seen no signs of disorder and turbulence.

“We will keep watching [the market] carefully,” Wu, who is the executive secretary of the fund’s management committee, said by telephone.

Despite confidence in Taiwan’s securities markets having been affected, Wu said stock market fundamentals remain healthy, with foreign portfolio investors buying a net total of NT$7.1 billion of shares yesterday.